EPLI: Employment Practices Liability Insurance
What is an EPLI policy and how can it help protect your company from employee lawsuits?
A type of insurance coverage that has become increasingly more important for our business owner clients over the past year or two is: Employment Practices Liability Insurance (EPLI).
An EPLI is a type of liability policy that can help protect your company from employment-related risks. Some of you reading this already carry this coverage. Some do not.
Allegations that may be defended include:
Discrimination based on gender, race, religion etc.
Wrongful termination
Failure to promote
Sexual harassment
Employment-related defamation
Unfair hiring practices
Claims for not paying overtime
Isn’t EPLI covered in my General Liability policy?
It is not. The General Liability (GL) policy excludes coverage for many areas where separate policies are the norm, like auto accidents and worker injuries. Similarly, the EPLI policy typically excludes perils that are covered on the GL policy like Bodily Injury and Property Damage.
How is EPLI Purchased?
Many small businesses have some EPLI coverage on their Business Owners policies. However, such coverage may have drawbacks:
The limit is often too low to address any significant EPLI claim.
There may be exclusions that could reduce coverage.
EPLI coverage can be purchased separately. Some commercial insurers also bundle it with D&O and other coverages into a management liability package.
How is the premium determined?
The premium for EPLI policies is based on several factors:
The number of employees and independent contractors that you have.
Your industry. Some industries are more prone to EPLI claims.
Whether or not you have policies and procedures in place for typical incidents like employee complaints and discrimination. Some companies will allow you some time to put such policies in place.
Your prior claim history for such matters.
Your desired limit of insurance. These policies pay for lawyer expenses and also for jury verdicts and settlements all in the same limit.
Does the policy come with any unique features?
Yes. Most EPLI policies come with access to a phone number that is NOT the Claims department but rather a third-party organization that can help you with tricky employment-related matters. For example, suppose you need to eliminate the position of an employee who has recently filed a Workers Comp claim. These consultants are experts in offering guidance in such matters.
There’s a lot at stake if an employment practices claim is filed against your business—and any business with employees could face a claim. It’s expensive and time-consuming to handle a lawsuit.
Is your business protected from the risks of an employment practices claim? Reach out at your convenience and we’ll talk through what you need.
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